The State of Housing

THE STATE OF HOUSING

In this article, we explore the causes and impact of the ongoing housing crisis.

Every single day, people walk through spaces— classrooms, offices, grocery store aisles—that influence them in both small and extraordinary ways. Of all the spaces that a person experiences, “home” is undoubtedly the most powerful. The home serves as a sanctuary, providing the comfort, stability, privacy, and security that is crucial to one’s physical and emotional well-being. Over the past few years, though, the housing crisis has dominated the headlines—but what exactly is the housing crisis?

The Crisis and Its Causes From the notable decrease in construction following the Great Recession to the many impacts of the 2020 pandemic, the United States has a shortage of between 5.5 and 6.8 million units (National Association of Realtors). This housing shortage and resulting exorbitant cost of single family homes has pushed would-be home buyers into the rental market, increasing the demand, competition, and cost for rental units.

The Great Recession played a significant role in shaping the housing crisis that is still unfolding today. With the market flooded with foreclosed properties, uncertainty in the market surged.

Banks and financial institutions faced major losses due to their exposure to mortgage-backed securities, and a contraction in lending made it more difficult for potential home buyers to obtain mortgages. The recession and market uncertainty led to a decrease in new housing construction.

The effects of the 2020 pandemic have also contributed to housing insecurity, as have changes in how and where we work. With businesses adopting remote work arrangements, demand for housing outside of cities, in suburban and rural areas, surged. To protect individuals from the economic hardship of the pandemic, federal and state governments implemented eviction and foreclosure moratoriums. Though crucial to preventing homelessness and housing instability during the pandemic, these measures created a backlog of potential evictions and foreclosures once lifted in 2022.

The pandemic’s supply chain disruptions hit construction and real estate especially hard. Delays in construction projects and increased construction costs limited the creation of much needed housing.

In an effort to stimulate the economy and combat the financial consequences of the pandemic, banks worldwide lowered interest rates, making mortgage loans more affordable. While this proved to be beneficial for home buyers, it also contributed to increased demand for housing, driving up property prices in areas with already limited housing supply.

Let’s explore how through strategic design thinking and sustainable practices, the architecture and design industry can contribute significantly to combating the housing crisis, ensuring that communities thrive amidst the challenges of inadequate housing availability.

Housing In 2023

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Affordable Housing: The Basics Affordable housing is typically defined as that which costs less than 30% of a person’s income. The U.S. Department of Housing and Urban Development (HUD) sets income limits for affordable housing using Area Median Income (AMI). Using this metric, HUD defines low income in terms of housing in the following three tiers:

Opportunities and Solutions As designers, architects, engineers, brokers, and builders, we are in the unique position to affect positive change on others through the built environment. How can the AEC industry drive creative solutions to the housing crisis?

Low Income: at or below 80% of AMI; Very Low Income: at or below 50% of AMI; Extremely Low Income: at or below 30% of AMI. The lack of affordable housing impacts everyone across income levels, though that impact looks different for various groups. Over the past few years, costs have risen across the board, with over 40% of renters cost-burdened, spending over 30% of their income on housing (United States Census Bureau, 2022). According to the National Low Income Housing Coalition, there are only 7 million units for the 11 million households that fall below 30% AMI. The Costs The need for more affordable housing has been exacerbated by a laundry list of challenges: inflation, increases in cost of living expenses, lack of affordable mental health and medical care, lasting effects of natural disasters, and the economic and physical impacts of the COVID-19 pandemic. The financial cost of the resulting housing insecurity is far-reaching; research from the National Low Income Housing Coalition found that, “The shortage of affordable housing costs the American economy about $2 trillion a year in lower wages and productivity. Without affordable housing, families have constrained opportunities to increase earnings, causing slower GDP growth...Researchers estimate that the growth in GDP between 1964 and 2009 would have been 13.5% higher if families had better access to affordable housing. This would have led to a $1.7 trillion increase in income, or $8,775 in additional wages per worker.”

There’s a human cost to these issues as well. The end of the Federal Eviction Moratorium and state eviction moratoriums across the country between 2021 and 2023 have also increased pressures and the risk of eviction for those experiencing housing insecurity. Eviction Lab, a national project dedicated to tracking eviction filings in 10 states and 34 urban centers across the country, reports that landlords have filed for 1,085,243 evictions in 2023.

Data from HUD in 2022 found that overall homelessness in the U.S. had increased by 6% since 2017 and that 40% of people experiencing homelessness did not have access to shelter.

In looking at who is facing homelessness, the same organization found that 22% of individuals experiencing homelessness in the U.S. are chronically homeless and struggling with either a mental illness, substance abuse disorder, or physical disability. 6% of individuals experiencing homelessness are veterans, and 5% are unaccompanied youth.

Richmond, Virginia In 2023, Richmond City Council officially declared a housing crisis, calling for increased attention and funding for affordable housing solutions. So, how has the housing crisis unfolded in our city? In the Partnership for Housing Affordability’s 2022 Data Update, they reported that the region is in need of almost 39,000 affordable homes. PHA also found that rising rents are outpacing rising wages, with the number of cost-burdened renters increasing by 1,900, and average rent in the city increasing by $300 per month. According to RVA Eviction Lab’s Quarterly Data Report for January 2023, over half (51.7%) of Virginia renters have seen rental increases in the past year.

Additionally, the Partnership for Housing Affordability’s findings support the idea that migration into Richmond is contributing to housing demand. New residents accounted for a majority of the population growth seen in 2021, and the region is expected to continue to grow by a third between now and 2050. This growth means affordable housing is more critical than ever before.

Development Addressing the lack of affordable housing is a complex challenge that requires a multi-faceted approach. Developers can play a crucial role in contributing to solutions by collaborating with non-profit groups and local governments, pursuing cost-saving construction methods, exploring innovative financing models, and engaging community members in the construction process.

In our interview with Richmond developer Bernard Harkless with Lynx Ventures, we discussed the role of developers in finding creative solutions for the housing crisis.

“It’s important to be mindful of the complexity of development, and understand that it goes beyond the capital requirements and involves so many moving pieces. If designers, architects, and service providers can come to the table with a base level of understanding of how development works, it affords us all more time and effort to spend on finding new, different solutions to this crisis. Additionally, connecting and engaging partners who are able to bring different resources to the table is essential.

Partnerships with non-profits, businesses, developers or other entities that are working to solve issues like these create more opportunities for us to look at this differently and come up with creative solutions using our collective expertise and perspectives.”

Adaptive Reuse Changes in how we work and the growing prevalence of remote work has contributed to the state of office space today; 21% of office space in the United States is vacant (JLL, Q3 2023 U.S. Office Outlook). Repurposing existing buildings into residential units could prove to be a valuable tool in combatting the housing crisis. In many cases, adaptive reuse can be more cost-effective than new construction, and renovating an existing building can be less expensive than building from the ground up if the structure is in good condition.

Converting unused buildings into housing also provides opportunities for the revitalization of urban areas, making them more attractive for residents and businesses. Adapting existing buildings also seeks to preserve the character, history, and social fabric of a neighborhood while adding new residents.

Multi-Family vs. Single-Family Moving towards Multi-Family developments and away from Single-Family zoning and construction is another method to create more units. Multi-Family developments offer lower per-unit construction costs compared to Single-Family homes, allowing more affordable rental and ownership options, which can help address housing affordability issues. They also offer a range of housing types and sizes, from studio apartments to larger units, thus accommodating varied family structures and income levels. Generally considered more landefficient than Single-Family homes, Multi-Family developments can make better use of urban space and infrastructure, reducing urban sprawl and the associated infrastructure costs.

Alternative Housing Approaches Looking abroad may offer an alternative approach to public, affordable housing. In Vienna, Austria, public, mixed-income developments house a majority of their population and are committed to quality and livability, with architecturally fresh spaces located in desirable areas. Vienna’s social housing does not serve exclusively low-income tenants, instead incorporating a mix of socioeconomic groups into diverse and inclusive neighborhoods. This approach aims to avoid the concentration of poverty in specific areas and promotes social cohesion. A significant portion of Vienna’s housing stock is publicly owned, either by the city government or non-profit housing associations, and the Viennese government continually builds thousands of new housing units every year.

Though Vienna’s model differs from how public housing has historically been approached in the United States, it could offer key insights and solutions. Increasingly more locales, including Denver, D.C. and L.A., are looking to the structure and goals of mixed-income social housing models abroad to improve upon their public housing offerings.

Looking Forward Our Shine the Light program acknowledges the role we play in shaping the spaces around us and seeks to educate ourselves and our audience about issues facing the communities we design for so we can design a more thoughtful, equitable world.

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